As one of the most valuable brand names worldwide, Coca-Cola has generally excelled as a business over its long history. However, in recent decades the company has had difficulty meeting its financial objectives and has been associated with a number of ethical crises. As a

result, some investors have lost faith in the company.

PEPSICO: SERIOUS COMPETITION

Coca-Cola has been a success for more than 120 years. In contrast, PepsiCo (founded at roughly the same time) did not become a serious competitor until after World War II, when it came up with the idea to sell its product in larger portions for the same price as Coke. The “cola wars” picked up speed in the mid-1960s and have not abated since. Today the two American companies wage war primarily on international fronts. While the fight occasionally grows ugly, with accusations of anticompetitive behavior, generally the two companies remain civil. For the first time in history, supermarket sales of Pepsi overtook Coke’s supermarket sales

in 1979. It wasn’t until early 2006, however, that PepsiCo enjoyed a market value greater than Coca-Cola for the first time. Pepsi’s strategy of focusing on snack foods and innovative approaches in the non-cola beverage market has helped the company gain market share and

surpass Coca-Cola in overall performance. During the 2008–2009 recession PepsiCo’s diversification strategy continued to pay off, which helped grow the company into the largest snack-maker in the world. On the other hand, some investors fear for Coca-Cola’s long-term

prospects because of the company’s dependence on international sales and a strong dollar. Combined with a global economic downturn, these are liabilities that may hurt Coca-Cola’s long-term profitability. Because PepsiCo does 60 percent of its business in North America, a strong dollar does not adversely affect the company as much as it does Coca-Cola. These factors may give PepsiCo more of an upper-hand over Coca-Cola in the future

COCA-COLA’S REPUTATION

Coca-Cola remains one of the most recognized brand names in the world today, with a market value of more than $173 billion in 2013. The company has always demonstrated strong market orientation, making strategic decisions and taking action to attract, satisfy, and retain customers. During World War II, for example, then-president Robert Woodruff distributed Coke around the world to sell to members of the armed services for a nickel a bottle. This strategy gave soldiers an affordable taste of home, created lifelong loyal customers, and increased global brand recognition. The presence of Coca-Cola products in almost every corner of the globe today shows how successful the company’s international marketing strategy has been. Savvy marketing and a reputation for quality have always been hallmarks of Coca-Cola and have helped to make the product ubiquitous.

CRISIS SITUATIONS

In 1996 Coca-Cola traded just below $50 a share. In 2013 it ranged between $58 and $69. This slow growth may be attributed to various internal problems led to a loss of reputation. The following incidents exemplify some of the key crises Coca Cola has faced in the last several years .associated with top management turnover and departure of key investors, as well as external problems that have

CONTAMINATION SCARE

Perhaps the most damaging of Coca-Cola’s crises—and a situation dreaded by every company—began in June 1999 when about thirty Belgian children became ill after consuming

Coke products. Although the company issued an isolated product recall, the problem escalated.

COMPETITIVE ISSUES

In the late 1990s, government inquiries into the company’s marketing tactics plagued the company throughout Europe. Because EU countries have strict antitrust laws, all firms must pay close attention to market share and position when considering joint ventures, mergers, and acquisitions. During the summer of 1999 Coca-Cola began an aggressive expansion push in France, and the French government responded by refusing Coca-Cola’s bid to purchase Orangina,

ALLEGATIONS OF RACIAL DISCRIMINATION

In 1999 Coca-Cola’s reputation was dealt another blow when 1,500 African American employees sued for racial discrimination. The lawsuit, which eventually grew to include 2,000

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